In a Large Open Economy, If an Import Quota Is

question 82

Multiple Choice

In a large open economy, if an import quota is adopted, then:

• A) net exports remain unchanged, as imports and exports decrease by equal amounts, while the real exchange rate rises.
• B) net exports remain unchanged, as imports and exports decrease by equal amounts, while the real exchange rate falls.
• C) net exports rise and the real exchange rate rises.
• D) net exports rise and the real exchange rate falls.

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Definitions:

Citrus Harvest

The collection or gathering of citrus fruits, such as oranges and lemons, which can significantly impact agricultural economies and markets.

Florida Orange

Refers to oranges produced in Florida, significant for their contribution to the U.S. juice market and sensitivity to weather-related events impacting prices.

Negative Earnings Surprises

Occurs when a company reports lower earnings than analysts' estimates, leading to potential stock price decline.

Abnormal Return

A financial term describing the difference between a security's expected return and its actual return, often due to unexpected news or events.